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Insuring the Titanic

This week marks the 100th anniversary of the tragic sinking of The Titanic on April 15, 1912. As the broker of the ill-fated ship, here’s our account of one of the insurance world’s largest losses…

Ever bigger, faster and more palatial trans-Atlantic liners dominated the shipping scene of the early 20th century. These ever larger ships, obviously, had rising values which were increasingly difficult to place in the insurance market.

By 1912, Willis Faber had a huge Marine account and was, as still is the case today, known as the world’s largest Marine broker. Willis had a reputation for being able to cope with high values and for placing the largest ships coming on to the market, including Cunard’s Lusitania and Mauretania in 1907, both weighing in at 31,000 GT. With The Titanic and her sister The Olympic at 46,000 GT, Willis was the obvious choice for White Star Line.

The Numbers

The original underwriting slip for The Titanic, courtesy of Lloyd's of London

Both vessels were covered on the same Hull & Machinery slip, valued at £1 million each (the equivalent of around £93 million today) and supported by 80 underwriters. It was clearly a challenging risk to place and the Willis brokers had to look further afield than the London Market, placing £40,000 (around £3.7 million in today’s terms) of the risk, for example, in Germany.

The rate was 15 shillings per cent (0.75%), costing White Star Line £7,500 to insure each vessel. Today’s rates for a comparable risk would be significantly lower. More interesting, is the surprisingly high deductible of £150,000 or 15% of insured value. Deductibles on today’s largest cruise ships tend to be considerably under 1% of value.

Claims for The Titanic totalled £16 million. The Hull claim of £1 million was collected by Willis and settled in full to White Star Line within 30 days of the disaster. It was at the time one of the largest single losses experienced by the Lloyd’s Market and is still one of the most significant losses in maritime history.

Human Error Still the Biggest Risk for Shipowners

What claims records tell us is that human error is still the major risk when considering catastrophic Marine losses which, considering the industrial and technological advances made in the last hundred years, is remarkable.

Cruise ships keep getting bigger. The latest vessels are up to four times the GT of The Titanic, the biggest values now approach USD 2 billion and, perhaps more significantly, carry up to six times the number of passengers and crew. The consequent increase in exposure to Marine insurers has grown exponentially.

Guest blogger Rachel Wilkinson is the Operations Manager of Willis Marine in London.

2 Responses to Insuring the Titanic

Very interesting information. Could you give more information about the breakdown of the 16 million pound claim? One million pounds for the hull. Do you know where the other 15 million pounds went? I believe there were about 1,300 passengers and 900 crew on board. So that would be a little under 7,000 pounds for each of them – or a bit more than 600,000 pounds in today’s dollars, using the rate used in your piece. Do you have any further information about who got the money?

Hi Gary, I checked with our Marine team and unfortunately, we don’t have a detailed breakdown of any Liability claim. You may be aware that White Star Line was entered in the Liverpool and London Steamship P&I Association. They should have details of any settled compensation claims from the Titanic’s crew and passengers. I hope this helps?